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Raytheon Reports Strong Fourth Quarter and Full-Year 2006 Results; Updates 2007 Full-Year Guidance

Highlights

WALTHAM, Mass., Feb. 1, 2007 /PRNewswire-FirstCall/ -- Raytheon Company (NYSE: RTN) reported fourth quarter 2006 income from continuing operations of $292 million or $0.65 per diluted share compared to $231 million or $0.51 per diluted share in the fourth quarter 2005. Fourth quarter 2006 income from continuing operations was higher primarily due to improved operating results at Integrated Defense Systems (IDS), Missile Systems (MS), and Network Centric Systems (NCS), partially offset by an after-tax goodwill impairment charge in the Flight Options business of $48 million ($55 million pretax) or $0.11 per diluted share.

As previously announced, Raytheon signed a definitive agreement in December 2006 to sell its wholly owned subsidiary, Raytheon Aircraft Company (RAC). This transaction is subject to customary closing conditions and is expected to close in the first half of 2007. As a result, Raytheon is now reporting RAC as a discontinued operation for all periods presented.

"Our strong backlog, bookings, sales, earnings, and cash flow are positive indicators of our focus on the customer, which in turn enhances shareholder value," said William H. Swanson, Raytheon's Chairman and CEO. "Raytheon's outstanding technology is providing capabilities for our customers' missions today and into the future."

Fourth quarter 2006 net income was $365 million or $0.81 per diluted share compared to $276 million or $0.61 per diluted share in the fourth quarter 2005. Net income for the fourth quarter 2006 included $73 million of income from discontinued operations or $0.16 per diluted share, primarily due to the results of RAC, versus $45 million of income from discontinued operations or $0.10 per diluted share in the fourth quarter 2005. Net income for the fourth quarter 2006 also included an after-tax goodwill impairment charge in the Flight Options business of $48 million ($55 million pretax) or $0.11 per diluted share versus an after-tax goodwill impairment charge of $19 million ($22 million pretax) or $0.04 per diluted share in the fourth quarter 2005.

Net sales for the fourth quarter 2006 were $5.7 billion, up 12 percent from $5.1 billion in the fourth quarter 2005, primarily due to IDS, MS and NCS.

Operating cash flow from continuing operations for the fourth quarter 2006 was $1.3 billion versus $1.0 billion for the fourth quarter 2005. The increase in the fourth quarter 2006 versus the fourth quarter 2005 was primarily due to reductions in working capital.

Net debt was $1.51 billion at year-end 2006 compared with $3.25 billion at year-end 2005. Net debt is defined as total debt less cash and cash equivalents. Both Fitch and Standard & Poor's ratings services recently upgraded Raytheon's credit rating to BBB+.

In the fourth quarter 2006, the Company adopted Statement of Financial Accounting Standards (SFAS) 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans, which resulted in a $1.9 billion increase to Liabilities and a $1.3 billion after-tax reduction to Stockholders' Equity.

Full Year Financial Results

For the full year the Company reported income from continuing operations of $1,107 million or $2.46 per diluted share compared to $818 million or $1.80 per diluted share in 2005, primarily due to improved operating results at IDS, MS and NCS combined with lower net interest expense and a reduction in pension expense.

The Company reported 2006 net income of $1,283 million or $2.85 per diluted share compared to $871 million or $1.92 per diluted share in 2005. Net income for 2006 included $176 million of income from discontinued operations or $0.39 per diluted share, versus $53 million of income from discontinued operations or $0.12 per diluted share in 2005, primarily related to RAC.

Total 2006 net sales for the Company were $20.3 billion compared to $19.0 billion for 2005, an increase of 7 percent, primarily due to IDS, MS and NCS.

Operating cash flow from continuing operations was $2.5 billion in 2006 compared to $2.3 billion in 2005. The increase in 2006 versus 2005 is primarily due to higher net income partially offset by higher cash tax payments in 2006.

  Summary Financial Results
  (in millions, except per       4th Quarter     %      Full Year       %
   share data)                  2006    2005  Change  2006     2005   Change

  Net Sales                    $5,722  $5,124   12%  $20,291  $19,038    7%
  Total Operating Expenses      5,232   4,729         18,451   17,526
  Operating Income                490     395   24%    1,840    1,512   22%
  Non-operating Expenses           40      39            152      259
  Income from Cont. Ops.
   before Taxes                  $450    $356   26%   $1,688   $1,253   35%
  Income from Continuing
   Operations                    $292    $231   26%   $1,107     $818   35%
  Net Income                     $365    $276   32%   $1,283     $871   47%

  Diluted EPS from Continuing
   Operations                   $0.65   $0.51   27%    $2.46    $1.80   37%
  Diluted EPS                   $0.81   $0.61   33%    $2.85    $1.92   48%

  Operating Cash Flow from
   Cont. Ops.                  $1,310    $996         $2,469   $2,313




  Bookings and Backlog

  Bookings                               4th Quarter        Full Year
  (in millions)                         2006     2005     2006     2005

  Total Bookings                        $7,794   $5,475  $23,001  $21,333

  Backlog                               Period ending
  (in millions)                       12/31/06 12/31/05

  Backlog                              $33,838  $31,528
  Funded Backlog                       $18,186  $14,980

The Company reported total bookings for the fourth quarter 2006 of $7.8 billion compared to $5.5 billion in the fourth quarter 2005, an increase driven primarily by several bookings at IDS, MS, NCS and Space and Airborne Systems (SAS). The Company reported full-year 2006 bookings of $23.0 billion, up 8 percent compared to $21.3 billion for full-year 2005.

The Company ended 2006 with a record backlog of $33.8 billion compared to $31.5 billion at the end of 2005.

  Outlook
  2007 Financial Outlook                        Current          Prior
                                                               (12/21/06)

  Bookings ($B)                                21.0 - 22.0     21.0 - 22.0
  Net Sales ($B)                               21.4 - 21.9     21.3 - 21.8
  FAS/CAS Pension Expense ($M)                     270             338
  Interest Expense, net ($M)                     65 - 80       Not provided
  Diluted Shares                                446 - 448      Not provided
  EPS from Cont. Ops. ($)                      2.85 - 3.00     2.75 - 2.90
  Operating Cash Flow from Cont. Ops.($B)       1.5 - 1.7       1.6 - 1.8
  ROIC (%)                                      8.2 - 8.7(1)  Not comparable

  (1) ROIC has been calculated using the Company's revised ROIC definition
      as detailed in Attachment F, which adds back the cumulative effect of
      minimum pension liability/impact of adopting FAS 158

The Company has increased full-year 2007 guidance for earnings per share from continuing operations and sales. In addition, the Company's full-year 2007 guidance reflects a reduction in pension expense and a revision to its Return on Invested Capital (ROIC) calculation.

Charts containing additional information on the Company's 2007 guidance, including sales and margin detail by segment, are available on the Company's website at http://www.raytheon.com/. See attachment F for information on the Company's calculation and use of ROIC, a non-GAAP financial measure.

  Segment Results

  Integrated Defense Systems


  (in millions, except margin    4th Quarter    %      Full Year      %
   percent)                     2006    2005  Change  2006    2005  Change

  Net Sales                    $1,189  $1,042   14%  $4,220  $3,807   11%
  Operating Income               $189    $154   23%    $691    $548   26%
  Operating Margin               15.9%   14.8%         16.4%   14.4%

Integrated Defense Systems (IDS) had fourth quarter 2006 net sales of $1,189 million, up 14 percent compared to $1,042 million in the fourth quarter 2005, primarily due to growth in DDG 1000 and international programs. IDS recorded $189 million of operating income compared to $154 million in the fourth quarter 2005. The increase in operating income was primarily due to higher volume and program performance improvements on domestic and international programs.

During the quarter, IDS booked $558 million for additional development work, including ship integration and detail design, for the U.S. Navy's DDG 1000 Destroyer program. IDS also booked $419 million for Joint Land Attack Cruise Missile Defense Elevated Netted Sensor System (JLENS) development for the U.S. Army, bringing the total JLENS booking to $1.4 billion.

  Intelligence and Information Systems


  (in millions, except margin    4th Quarter    %      Full Year      %
   percent)                     2006    2005  Change  2006    2005  Change

  Net Sales                      $690    $688   NM   $2,560  $2,509    2%
  Operating Income                $63     $63   NM     $234    $229    2%
  Operating Margin                9.1%    9.2%          9.1%    9.1%

Intelligence and Information Systems (IIS) had fourth quarter 2006 net sales of $690 million compared to $688 million in the fourth quarter 2005. IIS recorded $63 million of operating income in the fourth quarter 2006 and the fourth quarter 2005.

During the quarter, IIS booked $448 million on a number of classified contracts, including $110 million on a major classified contract, bringing the total classified bookings for the year to $1.5 billion.

  Missile Systems


  (in millions, except margin    4th Quarter    %      Full Year      %
   percent)                     2006    2005  Change  2006    2005  Change

  Net Sales                    $1,316  $1,122   17%  $4,503  $4,124    9%
  Operating Income               $138    $118   17%    $479    $431   11%
  Operating Margin               10.5%   10.5%         10.6%   10.5%

Missile Systems (MS) had fourth quarter 2006 net sales of $1,316 million, up 17 percent compared to $1,122 million in the fourth quarter 2005, primarily due to a ramp up on Standard Missile, international Advanced Medium-Range Air- to-Air Missile (AMRAAM), and several development programs. MS recorded $138 million of operating income compared to $118 million in the fourth quarter 2005.

During the quarter, MS booked $780 million for additional development on the Kinetic Energy Interceptor (KEI) system program for the Missile Defense Agency. MS also booked $271 million for the production of 500 AMRAAM missiles and $117 million for additional development on Standard Missile-3 (SM-3) for the U.S. Navy.

  Network Centric Systems


  (in millions, except margin   4th Quarter     %      Full Year      %
   percent)                     2006    2005  Change  2006    2005  Change

  Net Sales                    $1,011    $806   25%  $3,561  $3,205   11%
  Operating Income               $117     $89   31%    $379    $333   14%
  Operating Margin               11.6%   11.0%         10.6%   10.4%

Network Centric Systems (NCS) had fourth quarter 2006 net sales of $1,011 million, up 25 percent compared to $806 million in the fourth quarter 2005, primarily due to growth in the Combat Systems business. NCS recorded $117 million of operating income compared to $89 million in the fourth quarter 2005. The increase in operating income was primarily due to higher volume and program performance improvements.

During the quarter, NCS booked $363 million to provide Horizontal Technology Integration (HTI) forward-looking infrared kits and systems to the U.S. Army. NCS also booked $162 million for the production of Improved Target Acquisition System (ITAS) for the U.S. Army and the U.S. Marine Corps.

  Space and Airborne Systems


  (in millions, except margin   4th Quarter     %      Full Year      %
   percent)                     2006    2005  Change  2006    2005  Change

  Net Sales                    $1,175  $1,145    3%  $4,319  $4,175    3%
  Operating Income               $159    $162   -2%    $604    $606   NM
  Operating Margin               13.5%   14.1%         14.0%   14.5%

Space and Airborne Systems (SAS) had fourth quarter 2006 net sales of $1,175 million, up 3 percent compared to $1,145 million in the fourth quarter 2005, primarily due to growth in Airborne Radar Production programs. SAS recorded $159 million of operating income compared to $162 million in the fourth quarter 2005. Operating income was lower primarily due to favorable program profit and cost adjustments recorded in the prior year from certain production programs and a higher current year mix of development programs.

During the quarter, SAS booked $182 million for the production of Advanced Targeting Forward Looking Infrared (ATFLIR) pods and spares for the U.S. Navy as well as $135 million to develop a tactical radar for rotary and fixed wing platforms for the U.S. Army. SAS also booked $367 million on a number of classified contracts, including $233 million on a major classified contract, bringing the total classified bookings for the year to $1.5 billion.

  Technical Services


  (in millions, except margin   4th Quarter     %      Full Year      %
   percent)                     2006    2005  Change  2006    2005  Change

  Net Sales                      $604    $525   15%  $2,049  $1,980    3%
  Operating Income                $47     $39   21%    $147    $146   NM
  Operating Margin               7.8%    7.4%          7.2%    7.4%

Technical Services (TS) had fourth quarter 2006 net sales of $604 million, up 15 percent compared to $525 million in the fourth quarter 2005, primarily due to growth in the Logistics and Training Systems business. TS recorded operating income of $47 million in the fourth quarter of 2006 compared to $39 million in the fourth quarter 2005.

During the quarter, TS booked $217 million on a number of Logistics and Training Systems business contracts.

Other

Net sales for the Other segment in the fourth quarter 2006 were $246 million compared to $215 million in the fourth quarter 2005. The segment recorded an operating loss of $61 million in the fourth quarter 2006, which included a pretax goodwill impairment charge in the Flight Options business of $55 million, compared to an operating loss of $51 million in the fourth quarter 2005, which included a pretax goodwill impairment charge of $22 million in the Flight Options business. The $10 million increase in operating loss was due to the Flight Options impairment charge partially offset by improved operating performance.

Discontinued Operations

During the quarter, the Company recorded net income from discontinued operations of $73 million, compared to $45 million in the fourth quarter 2005, primarily related to RAC.

Raytheon Company (NYSE: RTN), with 2006 sales of $20.3 billion, is an industry leader in defense and government electronics, space, information technology, technical services, and business and special mission aircraft. With headquarters in Waltham, Mass., Raytheon employs more than 80,000 people worldwide.

Disclosure Regarding Forward-looking Statements

This release and the attachments contain forward-looking statements, including information regarding the anticipated sale of Raytheon Aircraft Company, and the Company's 2007 financial outlook, future plans, objectives, business prospects and anticipated financial performance. These forward- looking statements are not statements of historical facts and represent only the Company's current expectations regarding such matters. These statements inherently involve a wide range of known and unknown risks and uncertainties. The Company's actual actions and results could differ materially from what is expressed or implied by these statements. Specific factors that could cause such a difference include, but are not limited to: the risks associated with the satisfaction of the closing conditions to the RAC transaction; risks associated with the Company's U.S. government sales, including changes or shifts in defense spending, uncertain funding of programs, potential termination of contracts, and difficulties in contract performance; the ability to procure new contracts; the risks of conducting business in foreign countries; the ability to comply with extensive governmental regulation, including import and export policies and procurement, aircraft manufacturing and other regulations; the impact of competition; the ability to develop products and technologies; the risk of cost overruns, particularly for the Company's fixed-price contracts; dependence on component availability, subcontractor performance and key suppliers; risks of a negative government audit; the use of accounting estimates in the Company's financial statements; the potential impairment of the Company's goodwill; risks associated with Flight Options' ability to compete and meet its financial objectives; risks associated with the general aviation, commuter and fractional ownership aircraft markets; accidents involving the Company's aircraft; the outcome of contingencies and litigation matters, including government investigations; the ability to recruit and retain qualified personnel; risks associated with acquisitions, joint ventures and other business arrangements; the impact of changes in the Company's credit ratings; risks associated with the potential disruption to RAC's business during the period prior to the closing of the transaction; and other factors as may be detailed from time to time in the Company's public announcements and Securities and Exchange Commission filings. In addition, these statements do not give effect to the potential impact of any acquisitions, divestitures or business combinations that may be announced or closed after the date hereof. The Company undertakes no obligation to make any revisions to the forward-looking statements contained in this release and the attachments or to update them to reflect events or circumstances occurring after the date of this release.

Conference Call on the Fourth Quarter 2006 Financial Results

Raytheon's financial results conference call will be Thursday, February 1, 2007 at 9 a.m. ET. Participants will include William H. Swanson, Chairman and CEO, David C. Wajsgras, senior vice president and CFO, and other Company executives.

The dial-in number for the conference call will be (866) 800 - 8651. The conference call will also be audiocast on the Internet at http://www.raytheon.com/. Individuals may listen to the call and download charts that will be used during the call. These charts will be available for printing prior to the call.

Interested parties are urged to check the website ahead of time to ensure their computers are configured for the audio stream. Instructions for obtaining the free required downloadable software are posted on the site.

   Media Contact:            Investor Relations Contact:
   Mac Jeffery               Greg Smith
   781-522-5111              781-522-5141



  Attachment A

  Raytheon Company
  Preliminary Statement of Operations Information
  Fourth Quarter 2006

  (In millions except per share amounts)
                                   Three Months          Twelve Months
                                      Ended                 Ended
                                 31-Dec-  31-Dec-  31-Dec-  31-Dec-  31-Dec-
                                   06       05       06       05       04

  Net sales                      $5,722   $5,124  $20,291  $19,038  $17,825

  Cost of sales                   4,679    4,239   16,565   15,806   14,909
  Administrative and selling
   expenses                         431      364    1,422    1,290    1,202
  Research and development
   expenses                         122      126      464      430      413

  Total operating expenses        5,232    4,729   18,451   17,526   16,524

  Operating income                  490      395    1,840    1,512    1,301

  Interest expense                   71       75      273      312      418
  Interest income                   (28)     (11)     (77)     (41)     (36)
  Other (income) expense, net        (3)     (25)     (44)     (12)     436

  Non-operating expense, net         40       39      152      259      818

  Income from continuing
   operations before taxes          450      356    1,688    1,253      483

  Federal and foreign income
   taxes                            158      125      581      435      109

  Income from continuing
   operations                       292      231    1,107      818      374

  Income from discontinued
   operations, net of tax            73       45      176       53        2

  Income before accounting
   change                           365      276    1,283      871      376

  Cumulative effect of change in
   accounting principle, net of
   tax                                -        -        -        -       41

  Net income                       $365     $276   $1,283     $871     $417

  Earnings per share from
   continuing operations
      Basic                       $0.66    $0.52    $2.51    $1.83    $0.85
      Diluted                     $0.65    $0.51    $2.46    $1.80    $0.85

  Earnings per share from
   discontinued operations
      Basic                       $0.17    $0.10    $0.40    $0.12     $-
      Diluted                     $0.16    $0.10    $0.39    $0.12     $-

  Earnings per share from
   cumulative effect of change
   in accounting principle
      Basic                        $-       $-       $-       $-      $0.09
      Diluted                      $-       $-       $-       $-      $0.09

  Earnings per share
      Basic                       $0.83    $0.62    $2.90    $1.95    $0.95
      Diluted                     $0.81    $0.61    $2.85    $1.92    $0.94

  Average shares outstanding
      Basic                       440.1    442.6    441.8    447.0    438.1
      Diluted                     452.3    449.0    450.9    453.3    442.2



  Attachment A by quarter for 2006

  Raytheon Company
  Preliminary Statement of Operations Information


  (In millions except per share amounts)         Three Months Ended
                                          26-Mar-  25-Jun-  24-Sep-  31-Dec-
                                            06       06       06       06

  Net sales                               $4,660   $4,973   $4,936   $5,722

  Cost of sales                            3,807    4,032    4,047    4,679
  Administrative and selling expenses        319      345      327      431
  Research and development expenses          101      135      106      122

  Total operating expenses                 4,227    4,512    4,480    5,232

  Operating income                           433      461      456      490

  Interest expense                            69       68       65       71
  Interest income                            (21)     (13)     (15)     (28)
  Other income, net                          (26)     (13)      (2)      (3)

  Non-operating expense, net                  22       42       48       40

  Income from continuing operations
   before taxes                              411      419      408      450

  Federal and foreign income taxes           139      143      141      158

  Income from continuing operations          272      276      267      292

  Income from discontinued
   operations, net of tax                     15       34       54       73

  Net income                                $287     $310     $321     $365

  Earnings per share from continuing
   operations
      Basic                                $0.61    $0.62    $0.60    $0.66
      Diluted                              $0.61    $0.61    $0.59    $0.65

  Earnings per share from discontinued
   operations
      Basic                                $0.03    $0.08    $0.12    $0.17
      Diluted                              $0.03    $0.08    $0.12    $0.16

  Earnings per share
      Basic                                $0.65    $0.70    $0.73    $0.83
      Diluted                              $0.64    $0.69    $0.71    $0.81

  Average shares outstanding
      Basic                                442.3    442.7    441.9    440.1
      Diluted                              448.8    450.9    451.6    452.3



  Attachment A by quarter for 2005

  Raytheon Company
  Preliminary Statement of Operations Information


  (In millions except per share amounts)         Three Months Ended
                                         27-Mar-  26-Jun-  25-Sep-  31-Dec-
                                           05       05       05        05

  Net sales                               $4,502   $4,722   $4,690   $5,124

  Cost of sales                            3,748    3,906    3,913    4,239
  Administrative and selling expenses        303      320      302      365
  Research and development expenses           84      116      105      125

  Total operating expenses                 4,135    4,342    4,320    4,729

  Operating income                           367      380      370      395

  Interest expense                            75       83       79       75
  Interest income                             (9)     (10)     (11)     (11)
  Other (income) expense, net                 17        -       (4)     (25)

  Non-operating expense, net                  83       73       64       39

  Income from continuing operations
   before taxes                              284      307      306      356

  Federal and foreign income taxes            96      107      107      125

  Income from continuing operations          188      200      199      231

  Income (loss) from discontinued
   operations, net of tax                    (22)       1       29       45

  Net income                                $166     $201     $228     $276

  Earnings per share from continuing
   operations
      Basic                                $0.42    $0.45    $0.45    $0.52
      Diluted                              $0.41    $0.44    $0.44    $0.51

  Earnings (loss) per share from
   discontinued operations
      Basic                               $(0.05)    $-      $0.07    $0.10
      Diluted                             $(0.05)    $-      $0.06    $0.10

  Earnings per share
      Basic                                $0.37    $0.45    $0.51    $0.62
      Diluted                              $0.36    $0.44    $0.50    $0.61

  Average shares outstanding
      Basic                                450.6    449.0    445.6    442.6
      Diluted                              456.6    455.1    452.1    449.0



  Attachment B

  Raytheon Company
  Preliminary Segment Information
  Fourth Quarter 2006

  (In millions)



                                          Operating      Operating Income
                          Net Sales         Income     As a Percent of Sales
                        Three Months     Three Months       Three Months
                            Ended           Ended             Ended
                       31-Dec-  31-Dec- 31-Dec-  31-Dec-  31-Dec-  31-Dec-
                         06       05       06      05       06       05

  Integrated Defense
   Systems             $1,189    $1,042   $189    $154     15.9%    14.8%
  Intelligence and
   Information Systems    690       688     63      63      9.1%     9.2%
  Missile Systems       1,316     1,122    138     118     10.5%    10.5%
  Network Centric
   Systems              1,011       806    117      89     11.6%    11.0%
  Space and Airborne
   Systems              1,175     1,145    159     162     13.5%    14.1%
  Technical Services      604       525     47      39      7.8%     7.4%
  Other                   246       215    (61)    (51)   -24.8%   -23.7%
  FAS/CAS Pension
   Adjustment             -         -      (91)   (111)
  Corporate and
   Eliminations          (509)     (419)   (71)    (68)

  Total                $5,722    $5,124   $490    $395      8.6%     7.7%



                                                          Operating Income
                   Net Sales        Operating Income   As a Percent of Sales
             Twelve Months Ended   Twelve Months Ended   Twelve Months Ended
              31-    31-     31-     31-    31-    31-    31-   31-     31-
             Dec-    Dec-    Dec-   Dec-    Dec-   Dec-  Dec-   Dec-    Dec-
              06      05      04     06      05     04    06     05      04
  Integrated
  Defense
   Systems  $4,220  $3,807  $3,456   $691   $548   $417   16.4%  14.4% 12.1%
  Intelli-
   gence and
   Informa-
   tion
   Systems   2,560   2,509   2,334    234    229    203    9.1%   9.1%  8.7%
  Missile
   Systems   4,503   4,124   3,844    479    431    436   10.6%  10.5% 11.3%
  Network
   Centric
   Systems   3,561   3,205   3,050    379    333    269   10.6%  10.4%  8.8%
  Space and
  Airborne
   Systems   4,319   4,175   4,068    604    606    568   14.0%  14.5% 14.0%
  Technical
   Services  2,049   1,980   1,987    147    146    148    7.2%   7.4%  7.4%

  Other        828     781     675    (94)  (123)   (31) -11.4% -15.7% -4.6%
  FAS/CAS
  Pension
   Adjustment    -       -       -   (362)  (448)  (457)
  Corporate
   and
   Elimin-
   ations   (1,749) (1,543) (1,589)  (238)  (210)  (252)


  Total    $20,291 $19,038 $17,825 $1,840 $1,512 $1,301    9.1%   7.9%  7.3%



  Attachment B by quarter for 2006

  Raytheon Company
  Preliminary Segment Information

  (In millions)
                                                     Net Sales
                                                 Three Months Ended
                                         26-Mar-  25-Jun-  24-Sep-  31-Dec-
                                           06       06       06        06

  Integrated Defense Systems               $963   $1,038   $1,030   $1,189
  Intelligence and Information Systems      611      633      626      690
  Missile Systems                           989    1,117    1,081    1,316
  Network Centric Systems                   791      880      879    1,011
  Space and Airborne Systems              1,018    1,057    1,069    1,175
  Technical Services                        460      476      509      604
  Other                                     190      202      190      246
  FAS/CAS Pension Adjustment                -        -        -        -
  Corporate and Eliminations               (362)    (430)    (448)    (509)

  Total                                  $4,660   $4,973   $4,936   $5,722


                                                  Operating Income
                                                 Three Months Ended
                                         26-Mar-  25-Jun-  24-Sep-  31-Dec-
                                           06       06       06        06

  Integrated Defense Systems               $158     $177     $167     $189
  Intelligence and Information Systems       55       58       58       63
  Missile Systems                           110      122      109      138
  Network Centric Systems                    84       91       87      117
  Space and Airborne Systems                145      152      148      159
  Technical Services                         32       32       36       47
  Other                                     (13)     (10)     (10)     (61)
  FAS/CAS Pension Adjustment                (85)     (96)     (90)     (91)
  Corporate and Eliminations                (53)     (65)     (49)     (71)

  Total                                    $433     $461     $456     $490


                                                  Operating Income
                                               As a Percent of Sales
                                                 Three Months Ended
                                         26-Mar-  25-Jun-  24-Sep-  31-Dec-
                                           06       06       06        06

  Integrated Defense Systems              16.4%    17.1%    16.2%    15.9%
  Intelligence and Information Systems     9.0%     9.2%     9.3%     9.1%
  Missile Systems                         11.1%    10.9%    10.1%    10.5%
  Network Centric Systems                 10.6%    10.3%     9.9%    11.6%
  Space and Airborne Systems              14.2%    14.4%    13.8%    13.5%
  Technical Services                       7.0%     6.7%     7.1%     7.8%
  Other                                   -6.8%    -5.0%    -5.3%   -24.8%
  FAS/CAS Pension Adjustment
  Corporate and Eliminations

  Total                                    9.3%     9.3%     9.2%     8.6%



  Attachment B by quarter for 2005

  Raytheon Company
  Preliminary Segment Information

  (In millions)
                                                     Net Sales
                                                 Three Months Ended
                                          27-Mar-  26-Jun-  25-Sep-  31-Dec-
                                            05       05       05       05

  Integrated Defense Systems               $906     $940     $919   $1,042
  Intelligence and Information Systems      542      630      649      688
  Missile Systems                           990    1,007    1,005    1,122
  Network Centric Systems                   762      804      833      806
  Space and Airborne Systems                957    1,060    1,013    1,145
  Technical Services                        467      509      479      525
  Other                                     192      189      185      215
  FAS/CAS Pension Adjustment                -        -        -        -
  Corporate and Eliminations               (314)    (417)    (393)    (419)

  Total                                  $4,502   $4,722   $4,690   $5,124


                                                  Operating Income
                                                 Three Months Ended
                                          27-Mar-  26-Jun-  25-Sep-  31-Dec-
                                            05       05       05       05

  Integrated Defense Systems               $121     $139     $134     $154
  Intelligence and Information Systems       50       59       57       63
  Missile Systems                           105      104      104      118
  Network Centric Systems                    79       78       87       89
  Space and Airborne Systems                155      146      143      162
  Technical Services                         31       38       38       39
  Other                                     (24)     (21)     (27)     (51)
  FAS/CAS Pension Adjustment               (111)    (113)    (113)    (111)
  Corporate and Eliminations                (39)     (50)     (53)     (68)

  Total                                    $367     $380     $370     $395



                                                   Operating Income
                                                As a Percent of Sales
                                                  Three Months Ended
                                          27-Mar-  26-Jun-  25-Sep-  31-Dec-
                                            05       05       05       05

  Integrated Defense Systems              13.4%    14.8%    14.6%    14.8%
  Intelligence and Information Systems     9.2%     9.4%     8.8%     9.2%
  Missile Systems                         10.6%    10.3%    10.3%    10.5%
  Network Centric Systems                 10.4%     9.7%    10.4%    11.0%
  Space and Airborne Systems              16.2%    13.8%    14.1%    14.1%
  Technical Services                       6.6%     7.5%     7.9%     7.4%
  Other                                  -12.5%   -11.1%   -14.6%   -23.7%
  FAS/CAS Pension Adjustment
  Corporate and Eliminations

  Total                                    8.2%     8.0%     7.9%     7.7%



  Attachment C

  Raytheon Company
  Other Preliminary Information
  Fourth Quarter 2006
                                                                Funded
                                          Backlog              Backlog
                                       (In millions)        (In millions)
                                    31-Dec-06  31-Dec-05 31-Dec-06 31-Dec-05

  Integrated Defense Systems          $7,934     $8,010   $4,088     $3,009
  Intelligence and Information
   Systems                             3,935      4,077      893        642
  Missile Systems                      9,504      8,040    5,135      4,443
  Network Centric Systems              5,059      4,307    4,037      2,839
  Space and Airborne Systems           5,591      5,220    2,770      2,851
  Technical Services                   1,572      1,594    1,020        916
  Other                                  243        280      243        280

                                     $33,838    $31,528  $18,186    $14,980

  Government and Defense businesses  $33,595    $31,248  $17,943    $14,700



                                       Bookings              Bookings
                                     (In millions)         (In millions)
                                   Three Months Ended   Twelve Months Ended
                                  31-Dec-06  31-Dec-05  31-Dec-06  31-Dec-05

  Total Bookings                    $7,794     $5,475    $23,001    $21,333



  Attachment D

  Raytheon Company
  Preliminary Balance Sheet Information
  Fourth Quarter 2006

  (In millions)

  Balance sheets
                                                31-Dec-06          31-Dec-05
  Assets
  Cash and cash equivalents                       $2,460             $1,202
  Accounts receivable, less allowance
   for doubtful accounts                             178                227
  Contracts in process                             3,600              3,441
  Inventories                                        487                460
  Deferred federal and foreign income
   taxes                                             257                355
  Prepaid expenses and other current
   assets                                            239                255
  Assets held for sale                             2,296              2,373
    Total current assets                           9,517              8,313

  Property, plant and equipment, net               2,131              2,136
  Deferred federal and foreign income
   taxes                                             189                  -
  Goodwill                                        11,539             11,554
  Other assets, net                                2,115              2,378
      Total assets                               $25,491            $24,381

  Liabilities and Stockholders' Equity
  Notes payable and current portion of
   long-term debt                                   $687                $79
  Subordinated notes payable                           -                408
  Advance payments and billings in
   excess of costs incurred                        1,962              1,678
  Accounts payable                                   920                813
  Accrued salaries and wages                         944                939
  Other accrued expenses                           1,168              1,194
  Liabilities from discontinued
   operations                                         25                 49
  Liabilities held for sale                        1,009              1,028
    Total current liabilities                      6,715              6,188

  Accrued retiree benefits and other
   long-term liabilities                           4,232              3,337
  Deferred federal and foreign income
   taxes                                               -                 59
  Long-term debt                                   3,278              3,969
  Minority interest                                  165                119
  Stockholders' equity                            11,101             10,709
      Total liabilities and
       stockholders' equity                      $25,491            $24,381



  Attachment E

  Raytheon Company
  Preliminary Cash Flow Information
  Fourth Quarter 2006

  (In millions)

  Cash flow information
                                          Three Months      Twelve Months
                                              Ended             Ended
                                        31-Dec-   31-Dec-  31-Dec-  31-Dec-
                                           06       05       06       05

  Income from continuing operations        $292     $231   $1,107     $818
  Depreciation                               77       72      292      279
  Amortization                               21       23       81       79
  Working capital                           844      379      360      447
  Discontinued operations                   241      231      274      202
  Net activity in financing receivables      72       37      168      105
  Other                                       4      254      461      585
      Net operating cash flow             1,551    1,227    2,743    2,515

  Capital spending                         (149)    (142)    (295)    (298)
  Internal use software spending            (27)     (13)     (77)     (73)
  Acquisitions                                -      (26)     (87)    (125)
  Investment activity and divestitures        3       71       53       78
  Dividends                                (107)     (98)    (420)    (387)
  Repurchase of common stock                  -      (46)    (352)    (436)
  Debt repayments                           (17)    (585)    (462)    (676)
  Discontinued operations                   (20)     (11)     (47)     (41)
  Other                                      64        5      202       89
        Total cash flow                  $1,298     $382   $1,258     $646



  Attachment F

  Raytheon Company
  Non-GAAP Financial Measures
  Fourth Quarter 2006

  Our revised definition of Return on Invested Capital (ROIC) is the same as
  our prior definition except shareholder's equity is now adjusted to add
  back the cumulative impact of minimum pension liability/impact of adopting
  FAS 158. We define ROIC as income from continuing operations plus after-
  tax net interest expense plus one-third of operating lease expense after-
  tax (estimate of interest portion of operating lease expense) divided by
  average invested capital after capitalizing operating leases (operating
  lease expense times a multiplier of 8), adding financial guarantees less
  net investment in Discontinued Operations, and adding back the cumulative
  minimum pension liability/impact of adopting FAS 158.  ROIC is not a
  measure of financial performance under generally accepted accounting
  principles (GAAP) and may not be defined and calculated by other companies
  in the same manner.  ROIC should be considered supplemental to and not a
  substitute for financial information performed in accordance with GAAP.
  The Company uses ROIC as a measure of efficiency and effectiveness of its
  use of capital and as an element of management compensation.


  Return on Invested Capital

  (In millions)                           2005     2006     2007 Guidance
                                                          Low end   High end
                                                         of range   of range
  Income from continuing operations       $818   $1,107
  Net interest expense, after-tax*         177      129  Combined   Combined
  Lease expense, after-tax*                 67       68
  Return                                $1,062   $1,304   $1,400     $1,465

  Net debt **                           $3,925   $2,380
  Equity less investment in
   discontinued operations               9,270    9,626
  Lease expense x 8 plus financial
   guarantees                            2,702    2,779  Combined   Combined
  Minimum pension liability/
   FAS 158                               2,001    2,292

  Invested capital from continuing
   operations***                       $17,898  $17,077  $17,050    $16,850

  ROIC                                    5.9%     7.6%     8.2%       8.7%

  *   effective tax rate: 2005 - 34.7%, 2006 - 34.4%, 2007 - 34.2% (2007
      guidance)
  **  Net debt is defined as total debt less cash and cash equivalents and
      is calculated using a 2 point average
  *** Calculated using a 2 point average

SOURCE: Raytheon Company

CONTACT: Media, Mac Jeffery, +1-781-522-5111, or Investor Relations,
Greg Smith, +1-781-522-5141, both of Raytheon Company

Web site: http://www.raytheon.com/

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